Limitations and suggestions for further research

Limitations to this study include at least 1) an absence of sensitivity analysis with respect to discount rates used and assumptions related to variable construction, 2) testing whether certain favorable and non-favorable conditions related to effects of lease capitalization (e.g. conditions for positive net income effects of non-capitalization mentioned in the discussion of lease- capitalization-effect ambiguities), are systematically prevalent in subsamples of companies paying out varying levels of bonuses (i.e. controlling for these ambiguities), and 3) a limited sample (single industry, fairly few observation of paid-out cash bonuses).

In light of these results, it would be interesting to see a study, perhaps one which combines several industries thus yielding a larger sample size bringing out industry-specific characteristics hidden by lack of such comparison in this sample. The sample could be divided into two groups based on the estimated maturities of sample companies lease portfolios, one consisting of companies with short average time to lease maturity, and one a with similarly high average time. As temporal effects of lease capitalization cause lower comparative earnings for non-capitalizers of leases after the midpoint of portfolio lease life (whereas the opposite is true for finance leases), one could examine whether a CEO bonus-variable yields a positive relationship with operating lease intensity in the divided sample of companies with high lease- portfolio maturities (implying growing lease portfolios). On this note, it is likely crucial to study industries with growing lease portfolios for literature does not support the existence of a positive relationship between management compensation levels and operating lease intensities outside of them.

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